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Greece completes Piraeus port sale terms, shipping minister says

Greece has completed work on terms for an invitation to investors to express interest in a 67 percent stake in Piraeus Port Authority SA, operator of the country’s largest harbor.

The terms will be presented to the Greek Parliament “in the coming days and the sales process can begin 52 days afterward,” Miltiades Varvitsiotis, minister of shipping and the Aegean, said in an interview in Piraeus.

Greece’s asset-sales program, Europe’s largest, is aiming to raise 11 billion euros ($15 billion) by 2016, revised down from the 50 billion euros by 2015 originally agreed to under the country’s first international loan deal in 2010. The Hellenic Republic Asset Development Fund is targeting 450 million euros in 2014 from the stake sale in Piraeus Port and from the development of Thessaloniki Port, Varvitsiotis said.

Thessaloniki is a “different case” than Piraeus, as the port is “in the heart of the city and its exploitation must be based around that,” Varvitsiotis said. “The model for development hasn’t been decided yet, but the aim is to complete whatever method is chosen in 2014 as Thessaloniki can’t lose another wager for growth.” Greece currently holds a 74 percent stake in both Piraeus and Thessaloniki Port Authorities.

Cosco Pacific Ltd. has already expressed interest in acquiring the Piraeus stake, Varvitsiotis said. Piraeus Container Terminal, the company’s Greek unit, has operated Pier II at Piraeus Port since 2009 under a concession agreement with Piraeus Port Authority and is building a third pier.

The European Commission is investigating whether state aid was granted to Cosco under the form of tax reductions when the concession agreement was signed.

“I have met with Joaquin Almunia twice and we are on good ground for negotiations, while I will also meet with Michel Barnier in March to discuss the issue,” Varvitsiotis said. Almunia is the European Union antitrust commissioner, Barnier leads internal market and financial services policy.

“Approval by the European authorities will mean guaranteed income for the new owner of Piraeus from the concession agreement without the need to invest in Pier III,” Varvitsiotis said. “Non-approval will mean the new owner of the port will have the right to negotiate the deal with Cosco Pacific.”

The Greek government is in talks with the country’s shipowners, who control around one fifth of the world’s merchant fleet, to find a way to make a proposal to triple taxation on ships “more acceptable,” Varvitsiotis said. “Greek shipowners do want to contribute to the national struggle.”

The government in 2013 introduced a first-time levy on ships flying foreign flags but managed by companies based in Greece, as part of measures to boost revenue amid the nation’s debt crisis. The tax, which was already applied to Greek-flagged vessels, is based on vessels’ size and capacity.

While ship owners initially said they’d be willing to pay double the current rate over the next three years in order to raise 140 million euros, only 70 percent actually committed to the plan, prompting the government to triple the rate in order to reach the revenue target, Varvitsiotis said. [Bloomberg]